PRAVEENA REDDY,HYDERABAD V. ITO, WARD-8(3), HYDERABAD

ITA 50/HYD/2025

AI Insights

The case involves Smt. Praveena Reddy, who appealed against the order of the CIT (A) which upheld an ex-parte assessment order by the Assessing Officer. The Assessing Officer had treated all credits in the assessee's bank account amounting to Rs.27,37,664 as unexplained money and taxed it under section 69A of the Income Tax Act, 1961, applying section 115BBE. The assessee contended that these credits were from non-taxable sources such as maturity proceeds of LIC policies and loans, and not all were income. The Tribunal acknowledged the assessee's lack of participation due to personal circumstances and the non-receipt of notices, which led to the ex-parte orders. The Tribunal decided to remand the case for a thorough re-examination of the evidence and proper application of mind by the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26910 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SM-B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y V BHANU NARAYAN RAO
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Corroborative evidences; Gift
• Section: 144; 142(1); 250; 69A; 139

Judgement Text

" ITA No 50 of 2025 Praveena Reddy Hyderabad Page 1 of 8 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.50/Hyd/2025 (िनधाŊरण वषŊ/Assessment Year: 2017-18) Smt.Praveena Reddy Hyderabad PAN:BLLPR3601P Vs. Income Tax Officer Ward 8(3) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri Y V Bhanu Narayan Rao, CA राज̾ व Ȫारा/Revenue by:: Shri Karthik Manickam, DR सुनवाई की तारीख/Date of hearing: 11/02/2025 घोषणा की तारीख/Pronouncement: 14/02/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President This appeal filed by the assessee is directed against the order dated, 14/08/2024 of the learned CIT (A)-NFAC Delhi, for the A.Y.2017-18. 2. The assessee has raised the following grounds: “1. On the facts and in the circumstances of the case, the order passed by the learned CIT(A), NFAC, Delhi u/s. 250 for the AY 2017-18 is bad in law. ITA No 50 of 2025 Praveena Reddy Hyderabad Page 2 of 8 2. On the facts and in the circumstances of the case, the learned CIT(A), NFAC, Delhi, erred in upholding the act of the learned AO who erred in passing ex-parte assessment order by erroneously treating the entire credits of Rs.27,37,664/- in the bank account as income of the appellant for the A.Y.2017-18 on account of unexplained money u/s. 69A of the Act and further erred in taxing the same by erroneously applying the provisions of section 115BBE of the I.T., Act, 1961 and raising a demand of Rs.33,83,725/- (inclusive of interest of Rs.12,68,880/-). 3. On the facts and in the circumstances of the case, the learned CIT(A), NFAC, Delhi, erred in upholding the act of the learned AO who passed the ex-parte assessment order in a hurried manner and without proper application of mind since a simple verification of the bank statement would reveal that the credits in the bank account for the year comprise of FD maturity proceeds, loan against LIC policies, interest on FD and SB account apart from cash deposits which were made out of past savings and gifts received from husband and in-laws. 4. On the facts and in the circumstances of the case, the learned CIT(A), NFAC, Delhi, erred in upholding the act of the learned AO who erred by treating the entire credits made in the bank account as income instead of taxing only the income component, which clearly indicates that the assessment was made in a haphazard manner ignoring the basic principles of taxation and hence, the erroneous addition of Rs. 27,37,664/- needs to be deleted. 5. On the facts and in the circumstances of the case, the learned CIT(A), NFAC, Delhi, erred in upholding the act of the learned AO who erred by ignoring the fact that the total income of the appellant for the A.Y. 2017-18 was below the basic exemption limit and hence, the erroneous addition made by the learned A.O. u/s. 69A of the Act and the demand raised by applying the provisions of section 115BBE of the Act needs to be deleted. 6. Any other ground or grounds of appeal your Appellant may urge at the time of hearing.” 3. At the time of hearing, the learned AR of the assessee has submitted that the assessee is working as a private teacher ITA No 50 of 2025 Praveena Reddy Hyderabad Page 3 of 8 and did not file any return of income u/s 139 of the I.T. Act, 1961, as the income of the assessee was below the taxable limit. He has further submitted that the assessee did not receive any notice from the Assessing Officer and therefore, an ex-parte assessment order was passed by the Assessing Officer, whereby the Assessing Officer has made an addition of Rs.27,37,664/- on account of cash deposits in the bank account of the assessee u/s 69A of the I.T. Act, 1961. The learned AR has further pointed out that the assessee filed an appeal before the learned CIT (A), however, in the meantime, her 16 year old younger son got a spinal injury and the assessee was busy for getting the treatment of her son. The learned AR has filed a copy of the medical reports of the son of the assessee suffering from spine injury and therefore, the assessee could not participate in the proceedings before the learned CIT (A) resulting an ex-parte order passed by the learned CIT (A) dismissing the appeal of the assessee. The learned AR has referred to the bank account statement of the assessee and submitted that the Assessing Officer has made addition of the entire credits in the bank account of the assessee whereas out of the total deposits, a sum of Rs.13,50,000/- represents the credit on account of maturity of LIC policy and loan taken against the LIC Policy. The learned AR has also filed an application under rule 29 of the ITAT Rules for admission of the additional evidence comprising bank account statement of the assessee and an affidavit of the husband of the assessee to show that the husband of the assessee was in the process of buying a ITA No 50 of 2025 Praveena Reddy Hyderabad Page 4 of 8 house. However, due to the sudden demonetization, the funds mobilized by the family were deposited in the bank account of the assessee to the tune of Rs.12.00 lakhs for making payment to the builder of a sum of Rs.17.00 lakhs. The learned AR has also referred to the income details of the husband of the assessee along with Form 16 to show that the husband of the assessee was having the source for the said deposits in the bank account of the assessee as well as managed some funds by taking some loans from the friends. Thus, the learned AR has submitted that when majority of the credits in the bank account represents the maturity of LIC Policy, encashment of FD and loan taken by the assessee, then the additions made by the Assessing Officer of the entire credits and sustained by the learned CIT (A) are highly arbitrary and unjustified. Thus, the learned AR has pleaded that the additional evidence filed by the assessee be admitted and the matter be remanded to the record of the Assessing Officer for fresh adjudication of the matter after considering all these facts and source explained by the assessee. 4. On the other hand, the learned DR has submitted that there was no compliance to the notices issued by the Assessing Officer despite sufficient opportunities given to the assessee. The assessee even did not file any return of income u/s 139 or any response to the notice issued by the Assessing Officer u/s 142(1) of the Act. Further, after filing the appeal, the assessee again failed to respond to the notices issued by the learned CIT (A). ITA No 50 of 2025 Praveena Reddy Hyderabad Page 5 of 8 Thus, the learned AR has submitted that it is a case of gross negligence on the part of the assessee, who does not deserve another opportunity. He has relied upon the orders of the authorities below. 5. We have considered the rival submissions as well as the relevant material available on record. In the case in hand, the Assessing Officer has issued a notice u/s 142(1) on 13/03/2018 calling the assessee to file the return of income, but there was no response on behalf of the assessee to the notices issued by the Assessing Officer. Consequently, the Assessing Officer proceeded to frame the assessment u/s 144 of the Act, based on the material available before the Assessing Officer. The Assessing Officer has called the information from the bank of the assessee and noted that the assessee has deposited cash during the demonetization period, to the tune of Rs.13,59,000/- and total credits during the year is Rs.27,37,664/-. Since there was no explanation on behalf of the assessee regarding the cash deposits as well as other credits, the Assessing Officer has made the addition of the entire credit of Rs.27,37,664/- u/s 69A of the I.T. Act, 1961 and assessed the same as total income of the assessee. On appeal, the learned CIT (A) has confirmed the addition made by the Assessing Officer while passing the impugned order ex-parte. At the outset, we notice that the bank account statement of the assessee which was also the basis of the addition made by the Assessing Officer, reflects the transaction of credits representing the sum of Rs.4.00 ITA No 50 of 2025 Praveena Reddy Hyderabad Page 6 of 8 lakhs as Fixed Deposit maturity proceeds, Rs.2,02,500/- as LIC policy maturity amount and Rs.7,50,000/- as loan received against the LIC Policy. Therefore, a sum of Rs.13,52,500/- was credited in the bank account of the assessee on account of Fixed Deposit encashment on maturity, LIC Policy maturity amount and loan received against LIC Policy. The Assessing Officer ignored these facts, as reflected in the bank account statement of the assessee and made addition of the entire credits in the bank account as income of the assessee which is contrary to the facts manifest from the bank account statement itself. The assessee has filed an affidavit of her husband and explained the source of the cash deposits in the bank account of the assessee as fund mobilized for purchasing the house from the builder and due to the demonetization, the cash collected by the family was deposited in the bank accounts including the bank account of the assessee and subsequently paid to the builder through cheques. The payment made to the builder is also reflected from the bank account statement of the assessee. The assessee has also explained the reasons for non-participation before the learned CIT (A) as her young son of 16 years old, suffered spinal injury and the assessee was busy in getting the treatment of her son. The medical reports filed by the assessee corroborates this explanation of spinal injury suffered by her son. Accordingly, in the facts and circumstances of the case, when half of the amount credited in the bank account was not a deposit made by the assessee, but it was a credit on account of maturity of Fixed ITA No 50 of 2025 Praveena Reddy Hyderabad Page 7 of 8 Deposits, LIC Policy maturity amount and loan taken against LIC policy, then the addition made by the Assessing Officer for the entire credits is not sustainable, being contrary to the facts manifest from the record available with the Assessing Officer in the shape of bank account statement. Now the assessee has filed all the relevant supporting evidence as additional evidence, which requires to be verified and examined by the Assessing Officer. Hence, in the facts and circumstances of the case and in the interest of justice, we are of the considered opinion that the matter requires re-adjudication at the level of the Assessing Officer after considering the relevant facts and record. Accordingly, the impugned order of the learned CIT (A) is set aside and the matter is remanded to the record of the Assessing Officer for fresh adjudication after verification and examination of the relevant records filed by the assessee. Needless to say, the assessee shall be given an appropriate opportunity of being heard before passing the fresh order. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 14th February, 2025. Sd/- Sd/- (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 14th February 2025 Vinodan/sps ITA No 50 of 2025 Praveena Reddy Hyderabad Page 8 of 8 Copy to: S.No Addresses 1 Smt. Praveena Reddy, 46 Lalitha Nivas, Vemana Reddy Colony, Chandhanagar, Hyderabad 500084 2 Income Tax Officer Ward 8(3) Signature Towers, Sy.No.6(P) of Kondapur, Sy.37(P) of Kothaguda, Opp: Botanical Gardens, Serilingampally, R.R. District. 500084 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "